energy boom: why canada will be a global leader

Energy Boom:Why Canada will be a Global Leader

Derek Gates, CFAFounder

SWM Oil Sands Sector Index TM

SWM Canadian Energy Income Index TM

Cautionary Statement & DisclaimerThis presentation includes forward looking statements. Actual results may vary

significantly due to numerous factors both known and unknown to the author. The information contained in this presentation is not intended to constitute investment

advice and investors contemplating investing in the sector should seek professional advice before doing so and must not rely on the assertions, facts, opinions and projections provided in this presentation. Past performance does not guarantee

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Executive Summary• Global Demand for all sources of energy are expected to

increase by over 50% by 2030 from current levels (IEA, World Energy Report 2008)

• Canada is in a unique position to benefit from this trend with world class reserves in many of the key energy commodities such as crude oil, uranium, natural gas and coal

• You will learn how profitable investing in the energy sector will be over the next few decades and how you can profit from this mega trend by investing in the key growth sectors.

Global Demand for Energy• Population growth and rapid industrialization of

China, India and the Middle East is driving energy demand up

• Despite conservation and increased energy efficiency, demand will grow by 1.6% per year or by 45% from current levels by 2030

• Fossil fuels are still expected to represent over 83% of our energy needs in 2030

World Energy Use by Fuel Type, 1980-2030

Oil

Natural Gas

Coal

37.3%

25.4%

8.1%

Renewable

Nuclear

19.9%

6.8%

Future ShareOf World

TotalHistory Projections

39.7%

23.3%

22.4%

8.2%

3.7%

Source: EIA, IEA – WEO 2008

Hydro 2.5%Hydro 2.6%

Nuclear

Renewable

Natural Gas

Coal

Oil

Current ShareOf World

Total

Failing to Plan and Invest

• Coal will become the dominant energy source in the world

• After the crude oil and natural gas production will peak, coal and oil sands will have to substitute at the expense of the environment

• Nuclear, renewable and hydroelectric power will be developed too slowly to avert economic and environmental disaster

World Energy Use by Fuel Type, 1980-2030 Failure to Plan Scenario

Oil

Natural Gas

Coal 37.9%

24.9%

8.1%

Renewable

Nuclear

19.9%

6.8%



39.7%

23.3%

22.4%

8.2%

3.7%


Nuclear

Renewable

Natural Gas

Coal

Oil


Total

Source: SWM Ltd. Projections ©

Sustainable Energy Future

• Renewable energy such as wind, solar and biomass must be developed faster

• Crude oil and natural gas production will peak soon, coal and oil sands will have to substitute while renewable energy is developed

• Nuclear power is an important addition to the energy mix and should be used in combination with energy extraction

Sustainable World Energy Use by Fuel Type, 1980-2030 Sustainable Development Plan

Oil

Natural Gas

Coal

24.9%

24.2%

20.4%Renewable

Nuclear

19.9%

8.1%



39.7%

23.3%

22.4%

8.2%

3.7%

Source: SWM Ltd. Projections ©


Nuclear

Renewable

Natural Gas

Coal

Oil


Total

Global Crude Oil Production is at Peak• Global supply for crude oil has been flat since 2004

• Producing oil wells are depleting by at 5.1% per year globally (IEA – World Energy Outlook, 2008)

• Exploration and development costs for crude oil continue to climb as new sources of easy to find and extract oil becomes more scarce

• The quality of crude oil being extracted is declining, refineries need to focus on bitumen and heavy oil

Source: Sustainable Wealth Management Ltd., IEA

Source: SWM Ltd. Projections © , IEA WEO 2008


Major Producers are at a Plateau

FSU

Russia


Our Friends are Tapped Out


OPEC is Not Increasing Production

Source: Sustainable Wealth Management Ltd., Bloomberg

Source: IEA WEO 2008, EIA Oil Market Report, SWM Ltd estimates

Demand Grows, Existing Production is Flat

New Global Oil Requirements 2009 - 2018

Source: Sustainable Wealth Management Ltd. projections

0

5

10

15

20

25

30

35

40

45

50

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

MM boe/d

Needed for Demand Growth Needed for Depletion

Lack of Investment Opportunities• Over $26 Trillion US$ of energy investment is

needed between now and 2030. Half to be invested in power generation, half in energy production, mostly in fossil fuels

• At least 75% of proven global oil reserves are controlled by National Oil Companies (NOCs)

• Canada represents at least 55% of global reserves that can be invested in privately

• New discoveries are very scarce, most known oil and gas reserves are already being developed

Canada: The Future Oil King• Canada will soon be recognized as having

the largest oil reserves in the world and will become the largest oil exporter by 2030

• Geopolitically stable and the largest crude exporter to the US (16% of all US imports)

• Oil companies are all independently owned • Established industry which is open to foreign

investment

Oil Export Leaders 2007 to 2015


Oil Export Leaders 2030


ReservesProduction

Rate (boe/d)

Years of Production

at Estimated Production

Rates

Current Reserves

under developmen

t

83.9 Billion boe

1,150,000 boe/day 200

Total Proven Reserves

174 Billion boe

3,600,000 boe/day(IEA Estimate for

2018)132

Total Proven & Probable Reserves

305 Billion boe

5,900,000 boe/day(IEA Estimate for

2030)142

Production to continue for 100+ years

Source: Sustainable Wealth Management Ltd. Estimates ©, IEA

Best Buying Opportunity in 4 Years!

Source: Bloomberg, Sustainable Wealth Management, Ltd.

Production is up over 50% since 2004 and average oil prices have increased significantly.

Canada’s Other Energy Resources – Nuclear

• Canada is the world’s largest producer of uranium, providing over 25% of world supply

• Canada is second only to Australia in terms of uranium reserves

• Canada has its own nuclear power plant design and producers 16% of its electricity needs from uranium

Source: World Nuclear Association

Canada’s Other Energy Resources – Natural Gas

• Canada is the world’s third largest producer of natural gas and the largest supplier of natural gas to the United States

• Conventional reserves are 58 Tcf, and Natural Gas from Coal could add 200 Tcf to 550 Tcf

• Tight gas and shale gas will add another 500+ Tcf to Canada’s natural gas reserves

Source: Canadian Society for Unconventional Gas, CAPP

Canada’s Other Energy Resources – Coal

• Canada has about 10 Billion Tonnes of Coal of which we produce about 100 Million Tonnes per year

• Canada is one of the world’s largest producers of coking coal for steel production

• We have a 100 year plus supply of coal at our present consumption rate

Source: Coal Association of Canada

Canada’s Other Energy Resources – Hydroelectric

• Canada is the largest producer of hydroelectric power in the world, representing over 13% of world production

• The is another 182,832 MW of new potential power projects, 34,371 MW is practical in today’s economic and environmental situation

• Canada is the lowest cost producer of hydroelectric power in the world

Source: International Journal on Hydropower and Dams, Government of Canada

Canada’s Other Energy Resources – Wind

• Current installed capacity provides electricity to over 563,000 homes, about 3% of world capacity

• Canada’s has the world’s longest coastline and some of the world’s largest plain land areas, giving it one of the largest potential wind resource

• We have a 100 year plus supply of coal at our present consumption rate

Source: Canadian Wind Energy Association

Canada’s Other Energy Resources – Biomass

• Current installed capacity is 1,500 MW mostly using wood waste in the forestry industry

• Canada has 10% of the world’s forests and a large agricultural sector to provide feedstock

• 1,500,000 Canadian homes rely on wood for home heating

• Ethanol production from wheat, corn and other sources could triple in the near future from current production of 175 million L per yearSource: Centre for Energy, Forestry Canada

Contact Information

Derek Gates, CFA, CIM, CFP, FCSI

President & CIO

Sustainable Wealth Management Ltd.

Suite 224, 222 – 16th Ave NECalgary Alberta T2E 1J8

Phone 403 454-0881

Fax 403 454-0882

energy boom: why canada will be a global leader

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